Get to Know Your Options for a Reverse Mortgage Loan
Thinking about getting a reverse mortgage loan? If you’re 62 years old (or older than that) then this is a great opportunity to supplement your retirement income or get some cash in hand for other purposes.
However many people shy away from reverse mortgage loans, and the main reason for this is simple: They don’t understand how it works!
“What is a Reverse Mortgage Loan?”
If you’ve heard that a reverse mortgage loan is essentially the same as a mortgage, just in reverse – that’s perfectly true.
Think of it this way: When you take out a mortgage, you’re effectively ‘sharing’ ownership of your house with the lender and paying them off slowly. With each payment, you effectively end up owning a little more of the house, until eventually you’ve paid off the loan completely and the house is entirely yours!
With a reverse mortgage loan however, you’re going to be converting part of your existing equity in your house into cash and you won’t be paying off the lender on a monthly basis. Instead, the lender will recover the value of the loan (plus interest) when you pass away, sell your home, or when you’re no longer staying in it.
So effectively, you’ll be getting cash and you won’t have to worry about paying it back until or unless you no longer need the house that you’re taking a reverse mortgage out on. This is what makes reverse mortgage loans so advantageous!
Why not check out great rates on reverse mortgage loans at:
Types of Reverse Mortgage Loans
Now that you have a rough idea of what these loans are all about, it would be a good idea to build upon that by understanding the three main types of reverse mortgage loans that you’ll probably come across:
- Single Purpose Reverse Mortgage Loans
These loans are given out by state and local government agencies in general, though some non-profit organizations do the same. On the whole, these are the least expensive types of reverse mortgages, but there is a catch: The funds that you obtain from these loans can only be used for a single and pre-specified purpose.
- Home Equity Conversion Mortgages (HECMs)
HECMs are guaranteed by the US Department of Housing and Urban Development (HUD) but the process to apply for them can be lengthy, and the charges associated with this loan are comparatively steep.
- Propriety Reverse Mortgages
Instead of being government-related, these are private loans that have their own specific terms, so if you are interested in one of them you should definitely scrutinize the conditions carefully beforehand as they do vary depending on the lender.
Do you see the differences between these three types of reverse mortgage loans? Have you decided which one would suit your needs best?
Even if you haven’t, the fact of the matter is that you can easily get an extremely inexpensive reverse mortgage, and you can see the opportunity that awaits you for yourself at:
